Improving Credit Score

thedoorsgirl

I have debts of around £2,500 which I am currently paying back through Step Change on a debt management plan (they estimate 2020 I will be finished paying it back, but I hope to be able to pay it off sooner once I've finished my apprenticeship and get a higher paying job)

The debts consist of a Student Finance loan overpayment, and a couple of credit accounts (Littlewoods) and a phone contract, from when I was a stupid 18 year old and didn't consider my actions when applying for credit.

I'm now 21 (22 in August) and things have changed, I'm now renting my own property but have realised how frustrating it is to pay hard earned money towards rent and then have nothing to show for it really and I now want to try and improve my credit score to better my chances of getting a mortgage in the future. I am also trying to save up money when I can to in the future use towards a deposit for a house, but this is not a whole lot of money as it stands, I am currently earning £822 a month as an apprentice so after rent, bills, food and DMP it leaves me with around £10-20 but I think this is better than nothing, and it isn't too soon for me to start saving for my future.

My question is, once I have repaid the debt, how does this affect my credit rating? How can I improve it? Is there anything I can do to try and improve my situation?

Tixy

Do you know how your debts are showing on your credit files currently? Do you know which have defaults registered against them? and what dates the defaults are dated?

If you don't know its worth checking your credit files as that will help you plan better.

It is quite likely that by the time you have paid off your debts in 2020 that those debts will have dropped off your credit file.

Eventually time will heal your credit file and you'll then be able to start rebuilding a new 'clean' credit history.

thedoorsgirl

Tixy wrote: »

Do you know how your debts are showing on your credit files currently? Do you know which have defaults registered against them? and what dates the defaults are dated?

If you don't know its worth checking your credit files as that will help you plan better.

It is quite likely that by the time you have paid off your debts in 2020 that those debts will have dropped off your credit file.

Eventually time will heal your credit file and you'll then be able to start rebuilding a new 'clean' credit history.

Hi Tixy thank you for your reply.

I currently only have access to my Noddle credit file and as it stands, I have five debts registered on there (Barclays, EE, Vodafone, Littlewoods) and it also lists Nationwide (which is my current bank account but that says balance £0 as I don't have an overdraft with them or anything) but none have 'defaults' registered, they simply say 'late payment' then it says 'payment is up to 3 months late' but I'm not sure how recently it has been updated, as Noddle hasn't seemed to change for a few months now.

Is a Debt Management Plan the best way to go about it then? I don't want to avoid the debts as I accept full responsibility for them, I just want to be able to get a mortgage in future, but no more credit accounts! I have learnt a difficult lesson here.

Tixy

Have you only recently entered your DMP?

Typically a default is registered once a person is around 6months in arrears on an account. Although when you enter a DMP some creditors will issue a default straight away.

Noddle issue an updated report once a month.

Given your low level of debt and low level of money you can put towards the debts each month then it sounds like a DMP may be the best option for you.
Hopefully at some point your earnings will improve and you can perhaps get it paid off quicker.

thedoorsgirl

Yes my DMP started in February and tomorrow will be my 3rd payment towards it.

So the sooner I pay off the debt, the better? And then I can slowly make it better again?

Yes I get a Noddle report every month but I meant the companies contacting Noddle with updated balances etc.